Claire is a successful ENT physician who owns 100% of her incorporated medical practice. The medical practice operates as an S-Corporation. Carl, Claires husband, is a programmer for a national software security company. Claire and her husband, Carl, are considering the purchase of a commercial office building located near the local community hospital where Claire has practice privileges. The office building was previously owned and occupied by a plastic surgeon who was convicted of Medicare fraud and is currently in the Colman Federal Correction facility in Sumpter, Florida. The building will require plenty of work to shed the taint of the prior occupant but the location is good, there is ample parking and with some landscaping and exterior modifications Claire is confident that the building will make a good home for her practice. If they purchase the building, Claire would move her medical practice to the new location. The medical practice (a corporation) would rent space in the office building owned by Claire and Carl. Rent for the medical practice would be on the lower end of fair market rental amount. The rental income from rent paid to the building would not be enough to cover the expenses for mortgage interest, taxes, insurance and depreciation so the office building would produce a passive loss to Claire and Carl. The rental losses Claire and Carl will have from the office building would then be available to offset passive income generated by two other totally unrelated passive activities they own; an interest in a pool hall and a stake in an orange grove. The losses on the rental of the medical building would, Claire and Carl believe, be passive rental losses. The pool hall and orange grove are passive income. The net effect of this arrangement is a reduction in their income tax liability. Will Claire and Carl's plan withstand an IRS audit examination?

This is the writing prompt I was given and the main thing I am trying to find is whether or not the rental property would be passive income(loss).